(Answered) Ture or False: A Giffen good must have a negative income effectTure or False: A Giffen good must…

3. How can the negative income effect outweigh the substitution effect?
Through specific consumption patterns and budget shares. If the staple takes a large share of income and consumers cut higher-valued goods when real income falls, the negative income effect can exceed the substitution effect. This typically requires limited substitutes, strong inferiority, and non‑homothetic preferences.